11 January 2014:
A Sad Story

In an article on another issue I noticed that Danish electricity consumers have reached a top ranking on a list of EU electricity prices.

In the past it was the target of the electricity industry to serve Danish electricity consumers by approaching the other end of the list without compromising high environmental standards. Today the chart shows that this mission was a complete failure.

On the top of traditional cost elements Danish electricity consumers are charged with two additional expenses: the PSO tariff (public service obligations) and a regular tax.

-  The PSO tariff includes subsidies for the non-competitive environmentally friendly electricity production. The PSO tariff for the first quarter 2014 is DDK 190 per MWh (approximately € 25). The average Danish spot price in 2012 was about € 37 per MWh.
-  The climate minister has said that the regular electricity tax is necessary for maintaining the Danish Welfare Society. Another explanation is that the tax is a necessary incentive for saving electricity. In any case, if the tax revenue goes down due to saved energy the tax level will be raised correspondingly, says the minister.

It remains to be seen if improved environmental results will justify the level of the PSO tariff.

There is a lot of public attention on the level of direct taxes in Denmark. No wonder. Denmark is said to have the most expensive public sector in the world. Politically it is much easier to put additional taxes on energy than to increase the direct taxes on personal income.

In spite of noble intentions many bad investments were made in the Danish energy systems during the last 25 years. In the same period the Danish state has taken over the main electricity grid and by DONG Energy most of the large power plants. Due to bad investments abroad a part of DONG Energy has been sold to foreign investors.

From the consumers viewpoint the mixture of electricity economy and state economy has blurred the real cost of electricity and the public has very poor opportunities to detect bad decisions and arbitrary tax increases.

Decades ago the intention was to give Danish consumers cheap electricity and transparency on economy and technology of the supply system. Now the consumers have expensive electricity and an energy system with a completely incomprehensible economy.

A sad story, indeed

Opdateret d. 11.1.2014